Setting out the facts on the ABC and competition

Posted 30th June 2018

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By Michelle Guthrie, ABC Managing Director

Published 30 June, 2018, Fairfax Media

This week 86 years ago the first radio transmissions from the new Australian Broadcasting Commission crackled across the “wireless”. Anchored in the great traditions of the BBC, the new national broadcaster quickly found its mark in Australian life – providing programming that resonated with local audiences. It was distinctive, independent, proudly Australian and free – free from commercial, political and other agendas.

It was those very attributes that made the ABC the target of vested interests. Commercial media and their political allies fought bitterly against the establishment of the ABC in the first place. Then, during the 1930s, Sir Keith Murdoch and other newspaper owners insisted it be confined to broadcasting only five minutes of radio news bulletins per day – and only after 7.50pm, when it was expected people would have read the afternoon newspapers. They claimed it would steal their audiences and destroy their businesses.

We hear this argument every time the ABC takes advantage of new technology to serve the public. The cries of doom were there in radio, echoed in television and repeated when the ABC moved online. Now they are resurfacing.

Responding to the concerns of private media organisations, the Federal Government has set up a Competitive Neutrality Inquiry to determine if the public broadcasters are abusing their power, including in the new digital landscape.

The legal and economic principle of competitive neutrality means that publicly owned and private businesses should compete on a level playing field in respect of their business or “user-pays” activities. The ABC fully supports this. Our business activities are run by a separate unit and include activities such as the sale of books and music, with all modest profits re-invested into content. The ABC is very conscious of the need to abide by competitive neutrality principles.

The Productivity Commission has a standing unit to field complaints on this issue. The ABC has adhered to this process and the only time a complaint about the ABC crossed its desk was in 1999. The case was dismissed.

But let’s call a spade a spade. The Inquiry’s terms of reference extend far beyond arguments about a “level playing field”. Explicit in the terms, and in the submissions now beginning to surface, is a belief that the ABC shouldn’t be on the field at all, that our digital activities are crowding out commercial media outlets and destroying their businesses. The critics want the ABC corralled out of the digital landscape and confined to “legacy” and “market failure” activities.

It is the 1930s all over again.

The ABC has never shied away from arguing our case, and today we have delivered a detailed submission to the Inquiry. Using commissioned independent economic research and publicly available data, our submission shows that the ABC does not crowd out commercial operators and that the critics misunderstand the audience dynamics and ignore the evidence.

ABC radio and television focus on genres that are far removed from commercial output. We have no interest in reality TV formats, cheque book interviews and the music genres of commercial FM – programming that draws the biggest and therefore most lucrative audiences for commercial media. Nor are we in competition for rights to any of the marquee sports events. Instead, we complement the market as the trusted, independent source of Australian conversations, culture and stories.

We also reject the argument that by delivering news and other content free on online platforms, we are undermining efforts by some commercial media operators to extract revenue from their digital content.

Our digital remit is baked into our Charter, along with the requirement to do public interest journalism and offer broad appeal and specialist programs, such as for kids and regional audiences. We are digital because that’s where audiences are spending time for their news and entertainment.

To ensure these audiences are aware of our content, we spend a modest amount on digital marketing ($2.3 million – or 0.2 per cent of the ABC budget – in 2016-17). This is the digital media equivalent of the marketing the ABC has long undertaken, in forms such as outdoor billboards, print ads or bus signage.

Despite the small sum – a fraction of the digital marketing budgets of our commercial counterparts – some of them view us as cutting their lunch, attracting viewers away from their platforms and thus reducing their ability to profit from selling those eyeballs to advertisers. But the ABC has an obligation to make sure that in the online jungle of fake news and opaque algorithms, our content is visible and accessible to the Australians who fund it.

The commercial pain being experienced by Australian media may feel intensely local, but in reality digital disruption is a global affair. The ability of the new digital giants such as Google and Facebook to dominate online advertising and scoop up revenue has a much heavier impact on the profitability of the local commercial players than anything the ABC does. One gets the feeling the ABC makes a convenient target because regulating the overseas giants is so much harder.

If public broadcasting is such a heavy drain on commercial revenue, why then are commercial broadcasters and online publishers in the US suffering from declining audiences and profits? The US does not have public broadcasting of any large scale.

Analysis by economic consultancy RBB Economics commissioned by the ABC found no evidence the ABC “crowds out” commercial operators. Against comparable countries, Australia has lower per capita funding for public service broadcasting and commercial operators enjoy higher per capita revenues.

Our submission also torpedoes the notion at the heart of many of the critiques that every online reader, viewer or listener the ABC attracts is one lost to commercial revenue. Online news is an ecosystem where the audience is adept at picking up information from a variety of sources, paid and free.

On a monthly basis, 96 per cent of the ABC News audience visits another digital news outlet. According to the 2018 Reuters Digital Report, “the proportion of people who exclusively get their online news from public broadcasters is very low”.

The fact is, any move to curtail the scope of the ABC’s activities in an ill-conceived attempt to protect commercial media interests would only serve to punish Australian audiences who trust and value the ABC’s services.

The public supports the mixed-media model – public broadcasting operating alongside commercial operators – because it offers them diversity. And the ABC operates within a wider industry ecology, bringing benefits to the entire sector. There are direct benefits through licensing, co-production partnerships and other arrangements. Deloitte Access Economics estimates the ABC helps to sustain 2500 full-time equivalent jobs outside the ABC in the media and creative industries.

The ABC has also made positive use of our “innovation” remit, charting a course for the rest of the sector to follow. We pioneered multi-channelling and video on demand with our iview initiative, the latter entirely funded by internal efficiencies. The commercial TV stations declined the ABC’s offer to share iview with other broadcasters, but they happily benefitted from our successful market testing by launching their own catch-up services and multichannels years later.

Our investment in content and talent also benefits the sector and the broader community. The ABC’s commitment to in-depth news reporting and investigative journalism has resulted in exposes that have seen laws change and regulators act. Programs and concepts initially developed by the ABC have been adopted and developed by commercial media operators. We have also invested substantially in talented producers, presenters, journalists and musicians who have gone on to further success elsewhere, from Molly Meldrum to Andrew Denton, from Kasey Chambers to Kath & Kim.

If there is to be a debate on the value of the ABC, then let it be based on the facts, and with a firm eye to the future as well as the past. To fulfil its public remit, the ABC must be forward-thinking and equipped to meet the challenges ahead.

I can only echo the comments of Prime Minister Malcolm Turnbull, made in 2014 when he was Minister for Communications, that a well-resourced, digitally-equipped ABC is crucial to Australian life.

“It has always been a vital part of Australia’s public life, an important part of Australia’s journalistic life, of our whole body politic,” Mr Turnbull said. “As the inexorable changes brought by the Internet have done so much to undermine the business model of the other great foundations of journalism, the big metropolitan newspapers, the burden carried, or the responsibility carried, by the ABC, is more important than ever.”

The ABC’s submission to the Competitive Neutrality Inquiry and the RBB Economics executive summary are available online.

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